<PAGE> 1
PROSPECTUS SUPPLEMENT
(To Prospectus Dated April 12, 1993)
$250,000,000
LOGO
5 7/8% DEBENTURES DUE 2006
The Debentures will mature on February 15, 2006. Interest on the Debentures is
payable semiannually on February 15 and August 15 of each year, commencing
August 15, 1996. The Debentures may not be redeemed prior to maturity and will
not be subject to any sinking fund.
The Debentures will be represented by Global Securities registered in the name
of the nominee of The Depository Trust Company, as the Depository (the
"Depository"). Interests in the Debentures represented by Global Securities will
be shown on, and transfers thereof will be effected only through, records
maintained by the Depository and its direct and indirect participants. Except as
described herein, Debentures in definitive form will not be issued. The
Debentures will trade in the Depository's Same-Day Funds Settlement System. All
payments of principal and interest on Global Securities will be made by the
Company in immediately available funds. See "Description of the Debentures."
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE SECURITIES
AND EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION PASSED UPON THE
ACCURACY OR ADEQUACY OF THIS PROSPECTUS SUPPLEMENT OR THE PROSPECTUS. ANY
REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.
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PRICE TO UNDERWRITING PROCEEDS TO
PUBLIC(1) DISCOUNT COMPANY(1)(2)
Per Debenture........................ 99.637% .400% 99.237%
Total................................ $249,092,500 $1,000,000 $248,092,500
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(1) Plus accrued interest, if any, from date of issuance to date of delivery.
(2) Before deduction of expenses payable by the Company estimated at $70,000.
The Debentures are offered subject to receipt and acceptance by the Underwriter,
to prior sale and to the Underwriter's right to reject any order in whole or in
part and to withdraw, cancel or modify the offer without notice. It is expected
that delivery of Global Securities representing the Debentures will be made to
The Depository Trust Company on or about February 6, 1996.
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SALOMON BROTHERS INC
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The date of this Prospectus Supplement is February 1, 1996.
<PAGE> 2
IN CONNECTION WITH THIS OFFERING, THE UNDERWRITER MAY OVER-ALLOT OR EFFECT
TRANSACTIONS WHICH STABILIZE OR MAINTAIN THE MARKET PRICE OF THE DEBENTURES
OFFERED HEREBY AT LEVELS ABOVE THOSE WHICH MIGHT OTHERWISE PREVAIL IN THE OPEN
MARKET. SUCH STABILIZING, IF COMMENCED, MAY BE DISCONTINUED AT ANY TIME.
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USE OF PROCEEDS
Pacific Bell (the "Company") intends to apply the proceeds from the sale of
the Debentures to reduce short-term debt used to refinance the following Company
indebtedness called for redemption effective December 29, 1995: $102 million of
the Company's 9 1/8% Debentures due December 15, 2030; $200 million of the
Company's 7.80% Debentures due March 1, 2007; and $200 million of the Company's
7 5/8% Debentures due June 1, 2009.
RATIO OF EARNINGS TO FIXED CHARGES
The ratio of earnings to fixed charges of the Company for the year ended
December 31, 1995 is 4.51. For the purpose of calculating this ratio, earnings
consist of income before taxes and fixed charges. Fixed charges include interest
on indebtedness and the portion of rentals representative of the interest
factor.
RECENT DEVELOPMENTS
For the three months ended December 31, 1995, the Company reported earnings
of $222 million on revenues of $2.236 billion as compared to earnings of $247
million on revenues of $2.326 billion for the three months ended December 31,
1994. For the year ended December 31, 1995, the Company reported a loss of
$2.391 billion on revenues of $8.862 billion as compared to earnings of $1.071
billion on revenues of $9.067 billion for the year ended December 31, 1994.
Excluding the effect of a one-time, non-cash extraordinary accounting charge of
$3.36 billion, after taxes, for discontinuance of special accounting rules for
regulated companies, the Company's earnings for the year ended December 31, 1995
would have been $969 million.
DESCRIPTION OF THE DEBENTURES
The Debentures will be limited to $250,000,000 aggregate principal amount
and will be issuable only in registered form in denominations of $1,000 and
integral multiples thereof under an Indenture dated as of April 7, 1993, which
is more fully described in the accompanying Prospectus under "Description of
Debt Securities."
The Debentures will mature on February 15, 2006. Interest on the Debentures
will be paid from the date of issuance of the Debentures, expected to be on or
around February 6, 1996, and will be payable semi-annually on August 15 and
February 15 of each year, commencing August 15, 1996, to the persons in whose
names the Debentures are registered at the close of business on the August 1 or
February 1 prior to the payment date, at the annual rate set forth on the cover
page of this Prospectus Supplement. Principal of and interest on the Debentures
will be payable at the office or agency of the Company maintained for such
purpose, which, at the date of this Prospectus Supplement, is the office of the
Trustee, 101 California Street, San Francisco, California. Under the Indenture,
at the option of the Company, interest on the Debentures may be paid by check or
draft mailed to the person entitled thereto at the address of such person
appearing on the register of Debentures.
The Debentures may not be redeemed prior to maturity and will not be
subject to any sinking fund.
S-2
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The Debentures will be issued in the form of one or more registered Global
Securities which will be deposited with, or on behalf of, the Depository. The
Global Securities will be registered in the name of Cede & Co., the Depository's
nominee. Except for certain exceptions set forth in the Indenture, the
registered Global Securities may be transferred, in whole but not in part, only
to another nominee of the Depository or to a successor of the Depository or its
nominee.
The Depository holds securities for its participating organizations (the
"Participants") and facilitates the settlement among Participants of securities
transactions in such securities through electronic book-entry changes in its
Participants' accounts. Participants include securities brokers and dealers
(including the Underwriter), banks and trust companies, clearing corporations
and certain other organizations. Access to the Depository's system is also
available to others such as brokers, dealers, banks and trust companies that
clear through or maintain a custodial relationship with a Participant, either
directly or indirectly ("indirect participants"). Persons who are not
Participants may beneficially own securities held by the Depository only through
Participants or indirect participants.
The Debentures will trade in the Same-Day Funds Settlement System of the
Depository until maturity, and settlement for the Debentures will be made in
immediately available funds. In connection therewith, all payments of principal
of and interest on the Debentures will be made in immediately available funds.
Because the Debentures will trade in the Depository's Same-Day Funds Settlement
System, secondary market trading activity in the Debentures will be required by
the Depository to settle in immediately available funds. No assurance can be
given as to the effect, if any, of settlement in immediately available funds on
trading activity in the Debentures.
LEGAL OPINIONS
Certain matters relating to the legality of the Debentures offered hereby
will be passed on for the Company by Mr. James S. Hamasaki, General Counsel of
the Company. As of December 31, 1995, Mr. Hamasaki beneficially owned or had an
interest in approximately 1,114 shares of Pacific Telesis Group Common Stock and
had unexercised options under the Pacific Telesis Group 1994 Stock Incentive
Plan or its predecessor in the amount of 53,000 shares of Pacific Telesis Group
Common Stock. Certain matters relating to the legality of the Debentures offered
hereby will be passed on for the Underwriter by Pillsbury Madison & Sutro LLP.
For many years, such firm has acted and continues to act as counsel in certain
matters for the Company and certain of its affiliates.
S-3
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UNDERWRITING
Salomon Brothers Inc has, under the terms of and subject to the conditions
contained in an Underwriting Agreement dated February 1, 1996, agreed to
purchase, and the Company has agreed to sell to Salomon Brothers Inc, all of the
Debentures.
The Underwriting Agreement provides that the obligations of Salomon
Brothers Inc are subject to certain conditions precedent and that Salomon
Brothers Inc will be obligated to purchase all of the Debentures if any
Debentures are purchased.
Salomon Brothers Inc proposes initially to offer the Debentures directly to
the public at the public offering price set forth on the cover page of this
Prospectus Supplement, and to certain dealers at such price less a concession
not in excess of .300% of the principal amount of the Debentures. Salomon
Brothers Inc may allow, and dealers may reallow, a concession not in excess of
.250% of the principal amount of the Debentures to certain other dealers.
The Debentures are a new issue of securities with no established trading
market. The Company does not intend to apply for listing of the Debentures on a
national securities exchange. The Company has been advised by Salomon Brothers
Inc that it currently intends to make a market in the Debentures as permitted by
applicable laws and regulations, but Salomon Brothers Inc is not obligated to do
so and may discontinue market making at any time without notice. No assurance
can be given as to the liquidity of the trading market for the Debentures.
The Underwriting Agreement provides that the Company will indemnify Salomon
Brothers Inc against certain liabilities, including liabilities under the
Securities Act of 1933, or contribute to payments Salomon Brothers Inc may be
required to make in respect thereof.
S-4
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NO DEALER, SALESPERSON OR ANY OTHER
PERSON HAS BEEN AUTHORIZED TO GIVE
ANY INFORMATION, OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE
CONTAINED IN THIS PROSPECTUS
SUPPLEMENT OR THE PROSPECTUS, IN
CONNECTION WITH THE OFFER CONTAINED
IN THIS PROSPECTUS SUPPLEMENT AND
THE PROSPECTUS, AND, IF GIVEN OR
MADE, SUCH OTHER INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED
UPON AS HAVING BEEN AUTHORIZED BY
THE COMPANY OR BY THE UNDERWRITER.
NEITHER THE DELIVERY OF THIS
PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS NOR ANY SALE MADE
HEREUNDER AND THEREUNDER SHALL UNDER
ANY CIRCUMSTANCES CREATE AN
IMPLICATION THAT THERE HAS BEEN NO
CHANGE IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF. THIS
PROSPECTUS SUPPLEMENT AND THE
PROSPECTUS ARE NOT AN OFFER TO SELL
OR A SOLICITATION OF AN OFFER TO BUY
ANY SECURITY IN ANY JURISDICTION IN
WHICH IT IS UNLAWFUL TO MAKE SUCH
OFFER OR SOLICITATION.
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TABLE OF CONTENTS
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PAGE
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PROSPECTUS SUPPLEMENT
Use of Proceeds.......................... S-2
Ratio of Earnings to Fixed Charges....... S-2
Recent Developments...................... S-2
Description of the Debentures............ S-2
Legal Opinions........................... S-3
Underwriting............................. S-4
PROSPECTUS
Available Information.................... 2
Incorporation of Documents by
Reference.............................. 2
The Company.............................. 3
Use of Proceeds.......................... 4
Ratio of Earnings to Fixed Charges....... 4
Recent Developments...................... 4
Description of Debt Securities........... 4
Plan of Distribution..................... 8
Legal Opinions........................... 9
Financial Statements of the Company...... 9
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$250,000,000
LOGO
5 7/8% DEBENTURES DUE 2006
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SALOMON BROTHERS INC
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PROSPECTUS SUPPLEMENT
DATED FEBRUARY 1, 1996
